Real Estate Statistics & List to Sale Price Ratios

When I talk housing statistics, I commonly refer to the "list to sale price ratio".　Why is this so important?　The list/sale price ratio tells us a lot about the market conditions. For instance, a few years back, when the market was strong, we saw most properties selling at 95% to 100% of list price. When this percentage began to fall, it was a clear indicator of falling values. A smart REALTOR, who continuously watches housing trends and stays on top of the list/sale price ratios, will be able to provide the best advice to both Seller and Buyer clients. With Seller clients, we know pricing is the key to selling. If I see list/sale price ratio dropping, I know it is time to look at the pricing of my listing inventory and make recommendations to my Seller clients to better position them in the market we are given.

I do caution Buyers from using the list/sale price ratio as their sole source of establishing a price to offer on a property.　The current average list/sale price ratio for properties sold in Northern Door County is 88.52%. Knowing the trend, I had my Seller client’s price ahead of the curve. Because of this, my average list/sale price ratio so far this year is 93.95%. This means I am netting my Sellers 5.43% more than the market is giving AND we are selling faster with less complication. For information on complications that occur with contracts, see my blog, "Housing Trends & Contract Failures".

Housing Trends & Contract Failures

According to a recent report on National Housing Trends put out by the National Association of REALTORS (NAR), purchase contract cancellations caused the slip in residential home sales reported in June. Lawrence Yun, NAR chief economist, said, “Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market including an unusual spike in contract cancellations in the past month.” Yun further explained, it is unclear all the reasons why for the contract cancellations, but “problems including tight credit and low appraisals” are contributing factors. (REALTOR.org. Washington, DC, July 20, 2011).

While, I agree with Mr. Yun, the other less apparent reason for purchase contract cancellations is the uneducated participants involved in the transaction. Now, more than ever, it is vital that you work with a REALTOR who is educated on the market in which they represent. The best way to find that REALTOR, is to look for the REALTOR with the highest sales volume. Experience goes along with high sales volume. Nationally, the average REALTOR sells only 7 properties per year.

Here’s a thought for you………… If you’re told that you need surgery, would you choose a surgeon who has performed the surgery 7 times or one who has performed the surgery hundreds of times? I know that I’d choose the latter.

When you’re interviewing a REALTOR to represent you, ask how many properties they have sold in the last 5 years. Then ask them to show you the sales. I can almost guaranty you, by selecting the REALTOR with the largest sales volume, your transaction will make it to the closing table and it WILL close.